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As the U.S. wealth gap continues to reach new heights, a group of progressives and Democrats has introduced a bill that would take aim at corporations that provide their executives exorbitant compensation while paying their workers less by orders of magnitude.
The bill, dubbed the Tax Excessive CEO Pay Act, would raise the corporate tax rate for companies with a CEO-to-median worker pay ratio of 50 times or higher, with the tax rate increasing based on how stratified the company’s pay ratio is. The increase would start at an additional 0.5 percent added to the corporate tax, increasing incrementally up to 5 percentage points for companies that pay their executives over 500 times what they pay their median worker.
The bill would require private companies to make their CEO-worker pay ratios public, the same way that they are for public companies, while also requiring the Treasury Department to put regulations in place to ensure compliance — including measures ensuring that companies can’t dodge the tax by making use of contractors.
“The American people understand that today we are moving toward an oligarchic form of society where the very rich are doing phenomenally well, while working families continue to struggle to put a roof over their heads, feed their families, and pay for the basic necessities of life,” said Sen. Bernie Sanders (I-Vermont), the lead sponsor of the bill. “At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes and treat their employees with the dignity and respect they deserve.”
Sanders was joined by Senators Elizabeth Warren (D-Massachusetts), Ed Markey (D-Massachusetts) and Chris Van Hollen (D-Maryland) and Representatives Barbara Lee (D-California) and Rashida Tlaib (D-Michigan) in introducing the bill. It has been cosponsored by 11 lawmakers in the House and has the support of unions like the Service Employees International Union (SEIU) and advocacy groups like Public Citizen.
The CEO-worker pay ratio has skyrocketed in recent decades. In the early 1980s, CEOs were paid roughly 30 times the median worker on average across the top 350 U.S. firms, according to data analyzed by the Economic Policy Institute. This ratio drastically increased in the 1990s, and as of 2022, CEOs were paid 345 times the median worker on average across these firms, a slight decrease from a whopping 389 to 1 CEO-worker pay ratio in 2021.
That’s just the average across firms. As the bill sponsors detail in a press release on the bill, Walmart’s CEO was paid 933 times more than the company’s median worker in 2022, with the latter making only $27,136 while the CEO was paid $25.3 million. That same year, Nike paid its CEO 975 times more than it paid its median worker, JPMorgan Chase paid its CEO 393 times its median worker pay, and Coca-Cola’s CEO was paid 1,883 times its median worker pay, of a mere $12,122.
If implemented, the bill could capture $150 billion over the next decade, the press release says. If it were in place in 2022, companies like Walmart would have paid up to $754 million more in taxes,Chase would have paid over $1 billion more, and Google would have seen its tax bill increase by over $3 billion.
This contrast in pay is absurd; as the lawmakers point out, a typical worker at LiveNation, for instance, would have to work over 5,400 years to make one years’ compensation of CEO Michael Rapino, who was paid nearly $139 million in 2022.
Such high CEO pay ratios — and the outsized influence of the wealthiest households over the stock market — play a large role in fueling wealth inequality. A recent Oxfam report found that the world’s five richest men more than doubled their wealth between 2020 and 2023, while nearly 5 billion people across the world became poorer. If current trends persist, it would take nearly 230 years to eradicate poverty, while the world could see its first trillionaire in the next ten years.
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